Employees represent a company’s greatest assets but also one of its largest expenses. Consequently, companies need to keep a close eye on payroll performance metrics to ensure productivity and efficiency. There are dozens of metrics used by companies around the world, so how do you know which one to choose?
What Are Important Payroll Benchmarking Metrics?
Before setting payroll department objectives, it’s important to review existing data and determine what is normal or ideal. From there, companies can set more realistic goals.
1. Self-Service Portals
Employees need access to their pay stubs for a number of reasons. Some companies still print these manually, but this is often wasteful and ineffective. Modern companies now make it possible for employees to access the information they need online via self-service portals. In fact, 83% of workers report that they have access to self-service portals.
2. Portal Access
Some companies only allow workers to access these portals via the computers at work. This might seem like an excellent security measure, but it takes away some of the functionality and flexibility portals are supposed to provide. Review these payroll benchmarking metrics for the ways that workers access portals:
- 49% use desktop computers
- 24% use laptop computers
- 7% use smartphones
- 3% use tablets
3. Employee Hour Tracking
Payroll relies on accurate work hour data to ensure correct payment for hourly wages. More often than not, companies require clocking in manually via paper timesheets or electronic spreadsheets. Badges, card readers and biometric scans provide much better options. Keep in mind that even when workers are salaried, tracking work hours can provide better company-specific analytics and metrics in payroll.
4. Employee Pay
How do you pay your workers? In the past, check and cash payments represented the overwhelming majority. Now 96% of employees receive their pay through direct deposits. The remaining 4% of the general population relies on prepaid cards that employers can add money to each month, as well as paper checks.
5. Pay Card Fees
According to CNBC, 25% of American households are either unbanked or underbanked. These persons are more likely to rely on pay cards to receive their wages or salaries, but using these cards is not free. Employers do not have a legal obligation to explain the associated fees, but they do have a moral obligation of transparency with workers. Only 37% of workers received information regarding pay card fees from their employers.
6. Check Deposits Via Smart Devices
It also recently became possible for workers to deposit their paychecks by scanning them using a tablet or phone. This stemmed from improvements in fintech and made checks an excellent way to receive payments again. So far, 24% of employees scanned a check with personal devices.
7. Year-End Tax Documents
At the end of the year, companies must provide tax documents to their workers on payroll. Did you know that 39% of employers provide both paper and electronic copies of W2s? Meanwhile, 35% of employers print only paper returns.
What Are Some Payroll Benchmarking Best Practices?
For companies to get ahead of competitors, they must first determine what their competitors are doing and try to outdo them. Simply following the majority rule is not enough to beat out the competition. Consider these best practices.
1. Note the Industry
The benchmarking metrics that are true of one industry might not prove realistic for your business. So, find businesses of a similar size in the same field.
2. Determine Worker Type
Across America, several jurisdictions have revisited the criteria for employee vs contract workers. Workers who believe they are not true contract workers can also prompt an investigation of your business. So, consider carefully which workers should or should not be on payroll. Seek legal counsel if feasible.
3. Review Data
After paying workers, review the data to determine if there is room for improvement or any cause for concern. How well do labor payments align with expenses and productivity? Is there room in the budget for team expansion? Is worker retention a more important goal?
4. Communicate With Workers
Before you can give your employees what they want or need, you first need to identify their wants and needs. This starts with asking the right questions and determining which needs the company is poised to address.
How Can Technology Assist With Payroll Performance Metrics?
If you have a small team of five people or less and an experienced payroll professional, manually calculating paychecks is feasible. However, the ideal situation involves using technology to automate each process as much as possible: from clocking in to submitting payments for the week. This reduces the risk of errors.
Failing to pay employees their due wages on time can lead to severe penalties, including potential criminal penalties. Consequently, employers must generate consistent cash flow in the business to protect themselves from liability and to ensure no worker goes unpaid. Payroll performance metrics are a critical part of the puzzle in ensuring compliance and avoiding problems down the road, so it’s worthwhile making the investment now before problems arise, rather than playing catch-up after the fact.
